Moody's rates Empi loan Ba3

Moody's Investors Service assigned a Ba3 rating to Empi Corp.'s new credit facility made up of a $25 million guaranteed senior secured revolver, a $25 million guaranteed senior secured term loan A and a $125 million guaranteed senior secured term loan B. The outlook is stable.

Moody's said the ratings reflect the probability of downward pricing pressure as payers try to curb health care costs and the company's exposure to foreign exchange risk. The ratings also incorporate the positive growth trends in the company's market, and the company's substantial franchise in that market; its strong financial performance, both historically and as projected; its diversified product portfolio and customer base; and its solid infrastructure.

Empi is planning to recapitalize its balance sheet, using $175 million of new bank facilities to refinance $76 million of existing bank debt, redeem a $27.5 million note issued by its parent company (Empi, Inc.), and pay a $47 million dividend to shareholders and management, Moody's noted.

The stable outlook reflects Moody's expectation that the company will continue to grow revenues and cash flow in the mid-to-high single digit range over the rating horizon, using excess free cash flow to pay down debt.

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